In recent years, speculation in the affordable housing market is an accepted fact. Real estate investment targets the homes of low income families with the express intent to make financial profit from exploiting the residents who live in these buildings. This practice has failed. Over and over again. However, this hasn’t stopped the perception that massive profits can be gained by gambling on NYC’s affordable housing stock. The question in front of our policy makers now is how will we respond to this continuing and destabilizing crisis?

Stuyvesant Town is likely the most famous affordable housing complex that was victim to the overleveraging crisis of the early to mid-2000s. This is because both it is the largest housing complex with over 11,000 apartments and the fact that in 2006 it was purchased for an astronomical price of over $6 billion. This deal was in default within 3 years. Due to the complex nature of the financing, the buildings have been in limbo since 2009, but as was reported by the New York Times, the properties are back on their way to auction, and unfortunately, there are already willing bidders preparing to speculate on the buildings again.

Although, Stuy Town is the largest and most recognizable portfolio, it is hardly the only large complex on the edge of another critical moment. The Urban American Putnam Portfolio is a group of five former Mitchell Lama projects in upper Manhattan and Roosevelt Island that comprises nearly 4,000 units of what used to be protected, affordable housing. This portfolio is, similar to Stuy Town, at risk of being flipped again. Last week, Bloomberg News rendered an accurate and clear explanation of the history of the properties and the risk the portfolio is currently facing.

To give a brief history, in the height of the housing boom the portfolio was flipped twice under business plans to remove the affordability from the project, push out lower income residents and raise rents as high as possible. Urban American purchased the buildings for $918 million, taking out an $800 million mortgage financed by Fannie Mae. Fannie Mae also took the opportunity to invest at least $60 million in equity in the portfolio (although they won’t admit it) something which seems to be in direct conflict with their mission to protect affordable housing. It should come as no surprise that this isn’t the only time they’ve invested in these types of deals. To complicate matters further, it was discovered that the City Investment Fund partnered with Urban American in this predatory deal. The City Investment Fund includes money from the New York City and New York State retirement systems; a bitter irony considering many of the residents in these Mitchell Lama projects were public workers.

This $800 million mortgage is now due, which has inspired a flurry of activity around the portfolio. Urban American is looking for a new investment partner that would help them refinance. Brookfield Properties has expressed interest in buying a stake in a $1.1 billion refinancing. This is a $182 million increase over the last purchase price, which has stretched the rents to the highest level and allowed the conditions of the properties to decline. In the event of this refinancing both the City Investment Fund and Fannie Mae would be paid off, fulfilling their fiduciary responsibility at the expense of thousands of New Yorkers’ having an affordable place to live.

It DOESN’T have to be this way. We as a City can decide that we are going to fight to preserve these homes, as well as other buildings that are victims of this crisis. We can do this without creating diminution in value to the bondholders. Here’s what we need to do:

Fannie Mae: The mortgage was due in early May. As a deal has still not been completed, Fannie Mae is in a position as holder of the defaulted debt to push for a quicker preservation deal. Fannie Mae could also commit to finance a preservation deal that would protect the affordability and commit to improving the conditions. Additionally, Fannie Mae should take responsibility for the fact it invested in this portfolio and use its equity stake as additional leverage to push for a better outcome.

City Investment Fund/Comptroller Scott Stringer: The Comptroller should support the tenants and the preservation of affordable housing by taking a stance that doesn’t ignore the impact of his predecessor’s actions. Pension funds should never have been used in a deal that puts low and moderate income tenants at risk of losing their homes. However, there is no reason why the City Investment Fund couldn’t explore the opportunity to remain invested in these properties as long as an owner steps in who commits to affordability and decent housing.

HPD and other City Agencies: This portfolio represents a substantial amount of affordable housing in Upper Manhattan and Roosevelt island, and it should have never been allowed to lose its affordability protections. HPD and the other City Agencies should explore ways to once again tie rent restrictions to these buildings through the use of tax abatements or subsidy that would (a) provide much needed capital towards repairs and (b) add regulatory agreements that would keep the buildings affordable for the residents who call them home.

Mayor de Blasio and other Elected Officials: Mayor de Blasio, Speaker Melissa Mark-Viverito and the other Elected Officials should support the residents of these properties and the need to protect these units of affordable housing, a much needed resource of affordable housing in upper Manhattan and Roosevelt Island. They also could call all the above mentioned parties to the table with the tenants to negotiate how to preserve these properties.
This is not an easy task, in fact it will be difficult and tedious and with no assurances that we can win. However, the tenants are ready to stand up and take on this fight, the only question is who will stand with them?

This is not an easy task, in fact it will be difficult and tedious and with no assurances that we can win. However, the tenants are ready to stand up and take on this fight, the only question is who will stand beside them?

One of our new organizers, Yonah, had the opportunity to go to RootsCamp over the weekend. RootsCamp is an annual conference for organizers put on by the New Organizing Initiative, an organization that trains organizers in best practices in order to “win real change, make measurable improvements in people’s lives, and restore faith in our government and our democracy.”

I have been to many conferences and organizing trainings before. But nothing prepared me for the utter “grassroots-ness” of RootsCamp 2013. Somewhere between having Elizabeth Warren open the conference without any introduction or announcement that she was even speaking and trying to keep up with the constantly evolving schedule since anyone could run a workshop if they felt so inclined, I realized: these truly were my people.

Massachusetts Senator Elizabeth Warren, opening up RootsCamp 2013

I learned a lot in 36 hours. I learned about how to follow the money and take power from the wealthiest in this country. I learned about how to best use new media to target low-income tenants. I gained an knowledge of history and a framework to understand the recent rise of political progressivism in New York. I was trained on simple graphic design tools that can make it look like I studied art rather than history in college. I heard from organizers who had figured out how to go from petition clicks to handcuffs and escalate their actions. And I talked with other organizers about the importance of identity politics and fighting back against micro-aggressions.

And all that just from the official sessions. In the time between sessions — and usually during the sessions themselves — there were conversations being had in the hallways that felt like they could change the world.

One of the things that struck me was the use of the term “The Movement” over and over. At first I thought it was just the way that individual causes referred to their people, like the environmentalists or the immigration activists. It was not until the second day of RootsCamp, listening to renowned activist Heather Booth in a panel called “A life in the movement: Organizing for the long haul” I fully understood what “The Movement” was. It means the broader fight for justice and equality for all. It is the ultimate statement of solidarity.

As organizers working to create and maintain permanent and safe affordable housing for all New Yorkers, we often come into contact with (and blog about!) other issues facing our society: our hugely problematic immigration system and a minimum wage that barely allows hard workers to survive as two quick examples. One of the biggest downfalls of the progressive movement for too long has been to act solely to move each organization’s issue forward without working towards a broader shift in our society.

But in consistently using the term “The Movement” to describe what we were building at RootsCamp, activists from different movements made it clear that we were there to help each other and to change the world for the better. It was a profound lens through which to view our organizing here at UHAB. And it gave me a very hopeful outlook on the state of progressivism today.

So. Onward to a future full of opportunity for all. Onward to the continued education and growth of “The Movement”.

Today, thousands of fast food workers are striking in over 100 cities to demand $15/hour wage and the right to organize! We were going to write a long, passionate article about the connections between today’s fast food strikes and the housing justice movement. We were going to talk about how the same people who are struggling for better conditions and affordable homes are the same people who are forced to work in sub-standard conditions and get paid below living wages. We believe all this strongly, but Eviction Defense already published it in an article titled “Fight Forward: Why Fast Food Strikes are Important for Housing Justice.”

Here’s what we think is one of the most important point:

The struggle to make housing affordable and available is the struggle to eliminate class barriers to it. On the one side we struggle to take housing out of the marketplace and a good controlled democratically by the people, but on the other end we still live in an economy ruled by capital and if wages are too low to afford anything we cannot meet in the middle just by focusing on the housing sector independently. Instead, this is a multi-front fight that needs to be engaged in a number of sectors simultaneously, and the ability for low-wage workers like fast food employees to see a living wage opens up their access to housing almost immediately. This empowers us in the housing justice movement since it means that workers who are now seeing moderate housing financially accessible can begin finding stable communities, and we can then fight to keep rents and mortgages within financial reach and to protect people who lose their jobs or are still finding it difficult to make ends meet.

And also

What these strikes really remind us is that the housing justice movement is not centered on the issue of housing on its own, though things like rampant fraud and discrimination are rampant on their own. Instead, this is a fundamental issue of class struggle that roots itself in the unequal distribution of resources and economic power. Fast food stands as a beacon of an exploited workforce, where people are underpaid and does not allow people to engage equally in the things we all need. If we are really to target the unequal distribution of housing in this country, then it is always going to come down to the fundamental inequalities inherent in capitalism. To really confront this we need movements that take direct action in multiple sectors, where workplace struggles are one of the most important ways to target the sources of this oppression right at the point of production. Labor struggles are an indispensable part of the economic project we need to target if we are to ever get close to our dreams of equal access to housing and community control over the sector as a whole.

Preach it! To support the fast food workers, and the struggle for better conditions and access to resources for low-income people everywhere, join us today at 4:00 in Foley Square! See you in the streets!

This is a video from a few days ago when we celebrated the return of 1520 Sedgwick to well-maintained affordable housing for low to moderate income residents in the Bronx. This was the culmination of a long, hard-fought campaign started by the tenants with the assistance of UHAB in 2007.

I wasn’t the organizer in the 1520 Sedgwick campaign, since I joined UHAB in 2008. But because of the importance of the campaign my formation as a tenant organizer was shaped through the lens of 1520 Sedgwick.

In 2007, residents of 1520 Sedgwick reached out to UHAB and Tenants & Neighbors because they had learned that their building had been sold to a landlord who intended to remove affordability restrictions and attract higher paying tenants to make up for the fact that he over paid for the building in the first place.

Sedgwick was the iconic predatory equity campaign: strong tenants stood up to fight for their homes in a historic building known as the “Birthplace of Hip-Hop.” Tenants, with UHAB’s support, began pushing back against their landlord. Our earliest campaign goals at 1520 Sedgwick were to keep the buildings in the Mitchell Lama program and prevent a sale to real estate speculator Mark Karasick. Help came flooding in, starting with DJ Kool Herc, the father of hip-hop who started the cultural trend in the community room of 1520 forty years ago, but soon city leaders like Senator Schumer and Congressman Serrano, to name a few, joined the fight.

It was an emotional and impressive campaign. And, despite everyone’s best efforts, we failed. Big business profiteering off affordable housing won the fight. The building was sold to Mark Karasick, who bought it with a $7.2 million mortgage from Sovereign Bank, shortly thereafter it was removed from the Mitchel Lama program. Predictably, the building began to fall in to disrepair. However, rather than becoming discouraged, the tenants remained organized and continued to fight for what they knew their buildings could be.

That’s when Workforce Housing Advisors entered the scene, with an unconventional plan to purchase the mortgage and foreclosure on the owner. The tenants were ready to pick up the fight once again, and the second time around it was not difficult to find the support of city agencies and elected officials to help with this preservation option, and the building was recovered.

This recent celebration was the official ribbon cutting, post renovation of the building. The tenants and all their supporters who helped win this campaign came out to see what all the work was for, a beautiful affordable housing complex for the residents who fought so hard for their community.

While we are grateful for the support from all the organizations and agencies, we need to take a moment and specifically thank the tenants. Their struggle and their victory has taught UHAB’s Organizing and Policy Department so much over the past five years. When they reached out to us in 2007, we were in the early stages of predatory equity and were just discovering how financial malfeasance and mortgage over-leveraging based on speculation and gentrification, impacts tenants and their homes. Now, it defines our work. We learned about foreclosure at 1520 Sedgwick; Workforce Housing’s plan to purchase the mortgage and foreclose on the owner provided the inspiration for our campaign against New York Community Bank and created the framework for the First Look Program that came out of it.

Currently, while we continue to face the fallout of the previous housing bust, at the same time we see buildings being re-overleveraged. It’s disheartening to feel that real estate hasn’t learned from the failures of speculators like Karasic. Still, I look at the 1520 Sedgwick campaign and remember the resiliency of the tenants, their refusal to give up, and it reminds me that while it’s easy to be discouraged, the present isn’t permanent and the future is worth fighting for.

As tenant organizers, we are often asked about rent strikes. Do we support them? Have we worked with tenants in the past who have successfully gone on rent strike? Our answers range. Rent strikes are an extremely powerful tool for demanding change in your building, but as with any great power…there is great responsibility.

Rent strikes are not for the faint-of-heart, as tenants will almost certainly be brought to court by the landlord, and the money that residents save (by not paying rent) also cannot be touched, even to make repairs. During a rent strike, building conditions often temporarily worsen, and tenants have to deal with the frustrations of being dragged to housing court. For these reasons, we try to never encourage residents to hold a rent strike without legal support, and only when safely depositing their rent into an escrow account.

Like any strike, a rent strike uses collective action to take over the means of production and bargain for improved working or living conditions from property owners/industrialists. But what happens when the ruling class — i.e., the target of the strike — isn’t the property owner but rather a financier? A bank? Can homeowners go on strike against their lenders?

Abuses in the mortgage industry are well known. Yesterday, New York State Attorney General Eric Schneiderman sued Wells Fargo for persistently mishandling borrowers attempts to save their homes. Mortgage strikes have taken place nationally throughout history, are surfacing as a recent tactic to force banks into negotiations with homeowners. While mortgage strikes, like rent strikes, can be risky, homeowners at risk of eviction have a lot less to loose, and a lot more to gain.

ESOP, Empowering and Strengthening Ohio’s People, have been organizing underwater homeowners in Cleveland around housing rights and foreclosure. In 2012, Cleavland.com (SunNews) covered ESOP’s work around mortgage strikes:

The risks didn’t deter George Robinson of Cleveland, who said he is $45,000 underwater, meaning he owes more than his house is worth. He is among the first three homeowners to sign up for ESOP’s mortgage strike.

“I am 83, so I can afford to take this risk,” said Robinson, a retired autoworker. “Somebody has to take a stand against what these banks are doing.”

Participants in ESOP’s rent strikes are underwater homeowners with whom the banks have refused to negotiate with. Rather than continuing to pay the bank back their mortgage each month, homeowners deposit their payment into an escrow account and wait for the banks to come to the negotiating table. ESOP calls this “mortgage principle correction” — a play on the phrase “mortgage principle reduction,” which refers to a process whereby banks write down debt in order to avoid foreclosure and keep homeowners in their homes.

We support ESOP’s work, and hope that the mortgage striking movement, when successful, continues to grow. Others, on the other hand, are not so keen on the idea of mortgage strikes. We did some research on Stephen Lerner who calls for a large scale mortgage strikes, and it’s really shook up the Right. Article after article talks about Lerner’s anti-capitalist plan to bring down America. Why are mortgage strikes so scary to Big Business and Right Wing America? Because mortgage strikes (and rent-strikes for that matter) challenge the notion of who has power in our country, and strikes can be really successful tools for shifting that power. If you’re curious about what Right Wing America has been saying, check out some articles here, here, and here. Enjoy!

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The Surreal Estate is made up of the Organizing and Policy Department of the Urban Homesteading Assistance Board. We are motivated by our belief that all building residents have a say in what happens in their homes, and that tenants have an inherent right to assert their collective vision about how their homes should look and feel. The views and opinions expressed in these posts are those of the authors, and do not necessarily reflect the views of the Urban Homesteading Assistance Board as an organization.

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